KOLKATA: the Shining Star of the East 02 KOLKATA: the SHINING STAR of the EAST Foreword
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July 2018 KOLKATA: The Shining Star of the East 02 KOLKATA: THE SHINING STAR OF THE EAST Foreword ANUJ PURI Chairman ANAROCK Property Consultants Kolkata, the ‘City of Joy,’ not only resonates its rich old-world-charm, but also infuses a perfect blend of modernity with traditionalism. The city’s residential real estate development has come a long way and has emerged as the key affordable housing destination of India with around 62% of new units added between 2013 and Q1 2018 being priced less than INR 40 lakh. Being the British Capital of India, Kolkata is still dotted with old British architecture, royal buildings like Victoria Memorial and even the most famous Indian Coffee House, rendering a feel-good factor. Keeping in tune with the changing facade of most metros due to rapid Furthermore, fast-paced development of the urbanization and increase in multi-faceted INR 5,000 crore East-West Metro Corridor, developments, the city’s real estate market has connecting Salt Lake to Howrah and the CBD, also metamorphosed over the last decade. is already underway. Other than connecting the southern and northern fringes of the city via The recent push by the West Bengal metro and providing a lifeline for many office- government to accelerate infrastructure goers, further extension of East-West Metro development in the city is likely to bode well from Salt Lake City to NSC Bose Airport is also for the overall real estate market. For instance, being contemplated. All-in-all, these multiple to establish seamless connectivity, the state infra upgrades are likely to enhance the city’s government has undertaken multiple projects quality of life which will invariably propel real including the widening and extension of arterial estate growth in Kolkata in the near future. and secondary roads along with construction of flyovers and pedestrian underpasses across Other factors driving the city’s real estate the city. Various international companies are in growth include the rising demand by IT-ITeS the fray to collaborate with the government. and BFSI sectors. KOLKATA: THE SHINING STAR OF THE EAST 03 Relatively affordable property prices coupled In this report titled Kolkata: The Shining with the government’s push for development Star of the East, we have analysed the major is attracting several IT majors to the city which trends emerging in the ‘City of Joy’. In one of is giving a major boost to the city’s residential the major developments, ‘affordable housing’ market with investors and homebuyers making has gained significant traction in the city a beeline for investments. Besides the city during the past few years. Following the center areas, micro markets such as Rajarhat increasing demand for basic housing, the state New Town and Salt Lake City have witnessed government has also given a major push to this rapid real estate development over the past segment by recently introducing a new housing several years. The former is today home to scheme ‘Nijoshree.’ The scheme will provide several reputed IT majors including Cognizant, homes under two categories to people whose Tech Mahindra, IBM, Genpact, Hewlett-Packard, monthly income is above INR 15,000 and Wipro and TCS, amongst others. above INR 30,000 and, thereby, further boost affordable housing in the city. 04 KOLKATA: THE SHINING STAR OF THE EAST City Snapshot Located on the eastern bank of river Hooghly, 24,500/km2 14M Kolkata is the capital Density of people Total population within of West Bengal Kolkata Metropolitan Area (as of 2011 census) rd 185km2 3 4.5M Area most populous Total population metropolitan area in India within Kolkata City KOLKATA: THE SHINING STAR OF THE EAST 05 Calcutta Stock Exchange Opened in An economic hub to nearly (CSE) is India’s rd 1870 1,000 3 the Port of Kolkata is industries - textile, largest bourse not only India’s oldest mining, pharmaceuticals, operating port, but also manufacturing, IT-ITeS, a major riverine port defense, food processing, and heavy engineering Kolkata is a commercial, cultural, and educational center of East India. Besides Mumbai and Chennai, the city also acts as a major primary warehousing hub in India. 06 KOLKATA: THE SHINING STAR OF THE EAST City’s Development Timeline KEY HIGHLIGHTS Calcutta Metropolitan Development Authority Development of Kolkata’s Capital of India Basic development (KMDA) published the 1st planned residential area was shifted to New plan of the city was perspective development (Chowringhee-Park St. areas) Delhi from Kolkata published of plan of the city 1640 1700 1854 1912 1966 1986 1975 1976 Hooghly was Howrah Railway Development of Dum Dum occupied by Terminus satellite towns such as airport was English traders was opened Salt lake and Kalyani began opened KOLKATA: THE SHINING STAR OF THE EAST 07 Before Independence (Pre-1947) After Independence (Post 1947) New Millenium India K.M.P.C published KMDA proposed Under Ministry of perspective vision plan development plan Urban Development, 2025 which envisioned for Kolkata with Kolkata was covered multi-nodal strategy vision 2025 under AMRUT 1984 2001 2005 2007 2008 2015 2018 Metro became Revitalisation of the JNNURM New Town Kolkata Expected completion operational for city’s economy with urban Development of 1st phase of Eastern commercial development of IT- development Authority Act, 2007 Dedicated Freight services ITeS companies plans began was passed by West Corridor by Aug 2018 Bengal Legislature (benefitting Kolkata in the logistics sector) Major Infrastructure Initiatives State government of Kolkata under JNNURM has planned for the following physical infrastructure development: ROADWAYS: Extension and widening of the arterial roads, construction of pedestrian pathways, bridges, flyovers and elevated roads throughout the city. Broadening and strengthening of the secondary roads of the city to address the increasing population and enhance connectivity. METRO: Connecting Salt Lake to Howrah as well as CBD areas, state government has planned a further extension of East-West Metro, which is under progress and worth INR 5,000 Cr. E-CONNECT: Kolkata offers 580Mbps of communication infrastructure to the citizens with the intention of enhancing the quality of life. NIJOSHREE HOUSING SCHEME: Post the success of “Banglar Bari’ a rehabilitation scheme for the slum dwellers, state government has launched a new housing scheme ‘Nijoshree’ to satisfy the housing demand and boost affordable housing. 08 KOLKATA: THE SHINING STAR OF THE EAST Kolkata: Zonal Classification Kolkata is broadly divided into five zones: CENTRAL: Central Kolkata hosts the Central Business District (CBD) and also an upmarket retail hub with significant high-end residential developments EAST: The eastern part comprises of newly-developed areas WEST: West Kolkata is witnessing the emergence of various new commercial developments NORTH: North zone is one of the oldest regions in Kolkata comprising of dilapidated buildings, crowded bazaars, overpopulated slums and narrow alleyways SOUTH: South Kolkata, predominantly a residential region, also comprises of upscale neighborhoods KOLKATA: THE SHINING STAR OF THE EAST 09 Netaji Subhash Chandra Bose 1 North International Airport 2 Railway Station 3 Bus Terminus 4 Port Trust Arterial Road Network Hooghly River 1 West 2 3 East 4 South Central Not to scale, for reference only. 10 KOLKATA: THE SHINING STAR OF THE EAST Residential Real Estate Dynamics 2013 - Q1 2018 Between 2013 and Q1 2018, 119,000 residential Whilst absorption also declined due to the units were launched in Kolkata, of which 68% overall impact of structural changes and policy were added between 2013 and 2015. reforms, the dip was not as significant as that in new launches. In fact, the annual absorption With the rising unsold inventory due to improved by 3% in 2017 as compared to 2013, declining demand amidst the impact of policy indicating that the restricted supply and rising reforms such as DeMo, RERA and GST, new demand was impacting the market positively. launches dipped significantly post 2015, and the annual new supply addition declined by 2016 and 2017 saw a notable trend wherein 41% in 2017 as compared to 2013. absorption was almost at par with the total supply, thus reverting market sanity. Whilst Around 78,000 units were absorbed in Kolkata, Kolkata saw restricted supply post 2015, the of which 57% sales materialized between 2013 unsold inventory had already piled up and the and 2015. city had nearly 51,000 unsold units as of Q1 2018. Figure 1: Supply-absorption trend Figure 2: Unsold inventory trend Source: ANAROCK Research Source: ANAROCK Research Kolkata accounts for 7% of the overall unsold inventory across India’s top 7 cities (Q1 2018) KOLKATA: THE SHINING STAR OF THE EAST 11 Figure 3: Zone-wise residential unit launches (2013-Q1 2018) Figure 4: Zone-wise residential unsold units (Q1 2018) 1% Central 10% 34% West East 8% West 35% East 35% South 51,000 No. of unsold residential units in Kolkata (Q1 2018) 22% North 35% 20% South North Zone-wise residential units launches (2013-Q1 2018) Source: ANAROCK Research Zone-wise residential unsold units (Q1 2018) 12 KOLKATA: THE SHINING STAR OF THE EAST Residential Real Estate Deep Dive SUPPLY Trends clearly indicate that affordable housing Figure 5: Budget-wise supply trend (< INR 0.4 Cr) dominates the property spectrum in Kolkata and there has been a gradual increase in its supply over the years. This was followed by the supply in the mid- segment (INR 0.4-0.8 Cr units). Of the overall supply between 2013 and Q1 2018, affordable segment accounted for around 64%, followed by mid-segment at 23%. Recently announced state government initiatives like ‘Nijoshree’ housing scheme, dedicated funds for affordable housing announced by the central government and reduced GST rates for affordable housing primarily led to the boost in affordable housing supply. ABSORPTION Following the home buyer demand for affordable housing, developers were quick to launch projects in this category.